April 3, 2025

The Nigeria Economic Summit Group (NESG) has cautioned that the Federal Government risks revenue shortfalls if it does not raise the value-added tax (VAT) rate as part of the ongoing tax reform efforts. NESG’s Chief Executive Officer, Dr. Tayo Aduloju, made this statement during an interactive media session over the weekend in Abuja. He stressed that while VAT system reforms are necessary, keeping the current VAT rate unchanged could result in substantial revenue losses for the government. “Without those rate hikes, the government could lose significant revenue,” Aduloju warned. He explained that the ongoing fiscal and tax reforms aim to simplify the tax system while ensuring the government generates enough revenue to support its ambitious budgetary plans. However, he cautioned that merely reducing the number of taxes without adjusting the VAT rate could weaken the government’s revenue base. “If we successfully reform the VAT system, even if we delay a rate hike for three years, it would still be a win. Efficiency gains could attract more companies to invest in Nigeria,” he added. Aduloju emphasized the need to strike a balance between tax simplification and revenue sustainability, noting that reforms must not compromise the government’s financial stability. He also highlighted the importance of unlocking investment opportunities by addressing legal, regulatory, and policy obstacles that hinder foreign direct investment. Additionally, he called for better coordination between monetary and fiscal policies to curb inflation, particularly those driven by high energy costs. He argued that inefficiencies in the downstream petroleum sector contribute to persistent price hikes and that energy security remains a crucial factor affecting inflation. Meanwhile, the Trade Union Congress of Nigeria and the Nigeria Governors’ Forum have opposed the proposed VAT rate increase outlined in the Federal Government’s Tax Reform Bills, warning that it could exacerbate economic hardship for Nigerians. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.

In the ever-evolving world of finance, what worked in the past may not necessarily work in the present or future. It’s important to regularly reassess your financial strategies and make adjustments as needed, either independently or with the help of a professional financial planner. The start of a new financial year is the perfect time to do this. As we kick off the Financial Year 2025-26 on April 1, now is the ideal opportunity to get your financial affairs in order. Below, we’ve outlined seven personal finance tasks that you should consider tackling this April. While many of us focus on tax savings and new investment opportunities, it’s equally important to review your overall financial strategy as the new financial year begins. Take time to assess your budget—this can help you identify areas where you can cut unnecessary expenses, fix any errors from the previous year, and increase your savings. Additionally, revisiting your financial goals will ensure you’re on track to meet them. If not, consider adjusting your strategies or consulting a financial planner for guidance. April is the perfect time to start planning your taxes for the upcoming year. With the recent changes in the Budget 2025, including updates to the new tax regime, it’s important to reassess your tax strategy. For instance, if your income is under ₹12 lakh, you may not need to make certain tax-saving investments you previously did under the old tax regime. While you now have the flexibility to direct your funds differently, it’s essential to make thoughtful choices when it comes to tax-saving investments. To avoid unnecessary TDS deductions on your interest income, consider submitting Form 15G or Form 15H. Form 15G is available to individuals under 60 years of age with no taxable income, while Form 15H is for those over 60. Submitting these forms can help reduce TDS deductions on your income, but be sure to check if you’re eligible to file them. If you regularly invest a lump sum in schemes like the Public Provident Fund (PPF) and the National Pension System (NPS), consider making your investments in the first week of April. This allows you to earn interest for the entire year in PPF and potentially benefit from better returns in NPS, especially after recent market corrections. However, keep in mind that these investments won’t help with tax deductions under the new tax regime, so make sure your investment strategy aligns with your overall financial goals. April is an excellent time to begin preparing for your Income Tax Return (ITR) filing for the assessment year 2025-26 (for income earned in FY 2024-25). The deadline for filing ITR is July 31, 2025, for those whose accounts don’t need auditing. If you’re a salaried employee, you’ll need to wait for Form 16 from your employer (typically available after June 15), but in the meantime, you can start gathering other income proofs, such as capital gains, rental income, and professional income. It’s also helpful to organize your tax-saving investment documents and consult a tax expert if you have foreign income to report. Akshaya Tritiya, which falls on April 30, 2025, is traditionally a time for purchasing gold. If you’re buying gold for religious or spiritual reasons, go ahead with confidence. However, if you’re considering it as an investment, be cautious. Gold prices have surged significantly over the past year, and it’s important not to overexpose yourself to the yellow metal. Ideally, no more than 10% of your investment portfolio should be in gold. Finally, a more enjoyable task—plan your summer vacation! Whether you’re traveling with family or solo, booking your travel tickets early can save you a significant amount of money. Last-minute bookings often lead to inflated prices for flights and hotels, so it’s wise to plan ahead and secure better deals. By addressing these tasks early in the new financial year, you’ll set yourself up for a more organized and financially secure year ahead. Don’t wait until the end of the year—start now to make the most of the opportunities that lie ahead! For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036

In March, the naira (NGN) experienced a notable decline against the US dollar (USD) across both official and parallel foreign exchange markets, despite significant interventions from the Central Bank of Nigeria (CBN). The naira depreciated by 3%, even as the CBN injected more than $1 billion into the official market to stabilize forex inflows. The rise in demand for US dollars put significant pressure on the exchange rate, causing the naira to struggle against the greenback. Without the CBN’s aggressive FX interventions, analysts suggest that the naira’s performance could have been worse in March. CBN’s Support Helps Stabilize the Official Window During the final week of March, the official forex window saw relative stability, aided by an increased dollar supply from the CBN. Early in the week, the CBN sold $41.6 million, with exchange rates fluctuating between N1,527.50 and N1,531. This action helped curb further volatility in the market. Midweek, the CBN injected an additional $27.9 million, with the NGN/USD exchange rate trading within a narrow range. By the end of the week, rates ranged from N1,520.00 to N1,542.00, with the naira showing a slight week-on-week appreciation of 0.5 basis points, closing at N1,536.82. Market Overview: CBN Injects $1.03bn in March Throughout March, the CBN supported the market with a total of $1.03 billion, yet the official exchange rate still saw a 3% depreciation, ending at N1,536. The parallel market fared similarly, with a 3.23% drop, reaching N1,550. Despite the downturn, the year-to-date gains were positive, with the official rate up 0.09% and the parallel market up 6.13%, as reported by TrustBank Financial Group Limited. FX Reserves Decline, Forward Contracts See Naira Appreciation The nation’s foreign exchange reserves declined for the second consecutive week, dropping by $913.14 million to $38.33 billion. Meanwhile, in the forwards market, naira rates saw an increase across various contracts. The 1-month FX forward contract appreciated by 0.5% to N1,572.44, the 3-month contract rose by 1.3% to N1,635.09, the 6-month contract climbed by 2.4% to N1,727.16, and the 1-year contract surged by 4.8% to N1,899.27 per dollar. Market Outlook: CBN to Continue Liquidity Support Experts predict that the CBN will likely maintain its support for market liquidity, particularly amid weaker Foreign Portfolio Investment (FPI) participation in the FX market. This intervention is expected to help maintain stability for the naira in the short term. Global Oil and Gold Prices: A Mixed Outlook On the global stage, oil prices dipped on Friday amid concerns that ongoing U.S. tariff disputes could trigger a global recession. However, prices still remain on track for a third consecutive weekly gain, largely due to rising U.S. pressure on Venezuela and Iran. Brent crude futures fell by 0.6%, settling at $73.54 per barrel, while WTI crude dropped 0.9% to $69.31. Meanwhile, gold surged to a record high as investors flocked to safe-haven assets in response to escalating trade war fears. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036

Nigerian banks have collectively paid N205.49 billion ($132 million) in windfall taxes to the Federal Government, a move proposed by President Bola Tinubu to strengthen the nation’s financial reserves. Last year, Nigerian lawmakers approved a 70% tax on foreign-exchange gains earned by banks. This tax was set to take effect from the start of the new foreign-exchange rate policy, continuing until the end of 2025. The naira’s sharp depreciation following Tinubu’s relaxation of foreign exchange controls in 2023 resulted in substantial profits for some banks. In July 2024, the Nigerian government passed the Windfall Tax Bill, amending Section 29A of the Finance Act 2023, which imposed taxes on realized foreign exchange gains made by banks. As of now, nine banks have released their full-year 2024 earnings reports, confirming that the windfall tax payments have begun to be made to the Federal Inland Revenue Service (FIRS). Zenith Bank topped the list with the highest payment, contributing N63.3 billion, followed by United Bank for Africa (UBA) with N57.9 billion and Guaranty Trust Holding Company (GTCO) at N51.24 billion, according to data compiled by MoneyCentral. GTCO reported in its 2024 full-year financial statement: “The Federal Inland Revenue Service (FIRS) has assessed the Bank’s liability for the windfall tax, advising a total provision of N51 billion, which includes N23.7 billion for the year 2023. The Bank has recognized this provision in its financial statements, reflecting its commitment to comply with tax obligations and contribute to national revenue.” Other banks that paid the tax include Stanbic IBTC with N17.1 billion, Fidelity Bank with N13.3 billion, and Wema Bank with N2.616 billion. Ecobank Transnational, FCMB, a tier-2 lender, and FirstHoldCo Plc have not disclosed any windfall tax payments. FirstHoldCo Plc, which reported a currency revaluation loss of N332.78 billion in 2023, is likely exempt from the tax. As of the time of this report, Access Bank had yet to release its full-year 2024 results. The windfall tax is levied on foreign currency revaluation gains, which include net gains from the revaluation of foreign currency-denominated assets and liabilities, as well as the effective portion of gains on derivatives designated in fair value hedge of foreign currency risks. Moody’s Ratings indicated last year that the increase in the windfall tax rate to 70% from the previous 50% would have negative credit implications for banks. This new tax comes after the Central Bank of Nigeria (CBN) gave banks two years to strengthen their capital, ordering international banks to raise their capital ten-fold to N500 billion ($314 million) and local banks to increase their capital by eight-fold to N200 billion. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036

The Nigeria Economic Summit Group (NESG) has cautioned that the Federal Government could face significant revenue shortfalls if it does not proceed with increasing the Value Added Tax (VAT) rate as part of the ongoing tax reform process. Dr. Tayo Aduloju, the Chief Executive Officer of NESG, made this statement during an interactive media session in Abuja over the weekend. He stressed that while reforms to the VAT system are crucial, keeping the current VAT rate without an increase could result in considerable revenue loss for the government. Aduloju commented, “Without those rate hikes, it means that the government might lose some revenue.” He explained that the ongoing fiscal and tax reforms aim to address the complexities of the tax system while ensuring sufficient revenue generation to support the government’s ambitious budget plans. He further emphasized that the current tax reform process must strike a balance between simplifying the tax system and increasing the VAT rate to ensure revenue stability. “Simply reducing the number of taxes without adjusting the VAT rate could weaken the government’s revenue base,” Aduloju noted. Aduloju also suggested that even if the VAT rate hike is postponed for up to three years, it would still be a positive outcome, as it would demonstrate efficiency and help attract more foreign investment into Nigeria. “If we win on the reform of the VAT system, and even if we postpone the rate hike by three years, it will still be a win,” he said. While acknowledging the need for tax reforms to reduce the multiplicity of taxes, Aduloju stressed that these reforms should not come at the expense of revenue generation. He also highlighted the importance of unlocking investment opportunities to boost revenue, pointing out that Nigeria has ample assets that could attract foreign direct investment if legal, regulatory, and policy barriers were addressed. Additionally, Aduloju called for better coordination between monetary and fiscal policies to tackle inflation, particularly those caused by high energy costs. He emphasized that energy security plays a critical role in managing inflation, noting that inefficiencies in the downstream petroleum sector contribute to persistent price increases. The proposed VAT rate hike has faced opposition from the Trade Union Congress of Nigeria and the Nigeria Governors’ Forum, both of which warn that such a move could exacerbate the economic hardships experienced by many Nigerians. For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036